According to the report, Netanyahu is considering three options, but it is believed that his preferred route would be to dissolve the Knesset.

The first option is for Netanyahu to wait until March 31 without the state budget for 2015 passing its second and third reading in the Knesset, which by law requires an election at the end of June.

The second option is to approach President Reuven Rivlin and ask him to dissolve the Knesset. In such a case, 21 days will given for an alternative government to be formed before elections are called, possibly paving the way for Finance Minister Yair Lapid or Opposition leader Yitzhak Herzog forming an alternate government with the hareidim.

The third option is a bill to dissolve the Knesset. According to Channel 2, Netanyahu's associates are attempting to find out whether the other parties in the Knesset would support the dissolution of the Knesset if it is brought to a vote next week. Either way, Netanyahu is expected to decide on the issue within days, the report said.

Netanyahu and the parties in his coalition have been at odds over several issues, the latest being the controversial Jewish State Law, which passed a Cabinet vote this week but which Lapid and Justice Minister Tzipi Livni are opposed to and have threatened to vote against when it comes to a vote in the Knesset.

On Wednesday it was reported that Netanyahu, sensing that the coalition was headed towards a wall over the Jewish State Law, had offered hareidi parties Shas and United Torah Judaism (UTJ) a deal, according to which they will recommend that he form the next government, and he in turn will announce early elections.